Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s August 2018 Market Report

Lake Norman’s real estate sales numbers for August were exceptional. We logged in a total of 232 home sales which beats last August’s 211 by 10% and they were 18.4% above last month’s.   After some ups and downs at the beginning of the year, the past four months have helped us to record 39 more sales in the first 8 months of this year compared to 2017’s record breaking year which is truly impressive and, quite honestly, unexpected by early national real estate projections. The million dollar question is can we sustain this level for the rest of 2018?  My numbers below will provide some insight into where we are headed for the next few months.

Here are what I feel to be the biggest takeaways from last month’s Lake Norman real estate sales data:

  • August’s closed sales were strong: 10% higher than last August’s, 18.4% greater than last month’s, the second highest month this entire year and the best August in Lake Norman’s history!
  • Our inventory of active listings continues to drop to alarmingly low numbers (a whopping 146 fewer than last year!) after never reaching our normal summer highs and yet we are still recording high sales.  It is hard to quantify but there is no doubt that the low inventory does have a negative impact on our Lake Norman’s home sales.
  • We are seeing some weaker pending sales which may be an indication of a slowdown at least for the next few months.
  • Waterfront homes moved back into a seller’s market.
  • I want to share with you again this great interactive calculator for determining rent vs. own costs from the New York Times!

Let’s take a closer look:

Lake Norman Real Estate's August 2018 Sales Analysis

All data is from the Carolina Multiple Listing Service.

Some significant additional statistics for you:

  • Waterfront homes moved back into a seller’s market in August with the months of supply dropping to 4.9 compared to 6.4 last month and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)
    • Waterfront sales in August represented 25% of Lake Norman’s total sales while comprising 36.6% of our active listings and 31% of our under contract listings.
    • The average price per square foot of our waterfront homes dropped to $248.18 from $262.05 last month.   
    • It took on average 120 days for a waterfront home to sell and they sold for 95% of their listing price.
    • The average price per square foot for our waterfront homes has still not returned to 2007’s peak of $283.16.  So while we have experienced improved activity, our prices are still under their pre-recession highs.
    • There are definitely HOT waterfront properties.  I sold one in May for over asking that had 5 offers in the first week.
    • Vacation rental properties are in great demand which has led to more buyers purchasing waterfront homes for this purpose.
  • 43 new construction homes closed in August through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. The average listing price vs sales price of new construction single family homes was 99%. This suggests there may be some wiggle room with builders so give negotiating a try! (And, don’t forget to ask builders for all those great upgrades!) We currently have 96 new construction homes under contract in the MLS up from 88 last month. The average sales price in August was $426,837.  The months of supply of active listings based on August’s sales is 3.6 which not surprisingly puts them very much in a seller’s market.
  •  There were 2 closed distressed sales (Foreclosures (REO’S), defaults, Short Sales) in all of Lake Norman in August.  We have 5 under contract and only 7 distressed active listings as of today. Clearly, distressed sales continue to play an insignificant role in our Lake Norman real estate market. 
  • 41.8% of Lake Norman’s August’s single family home sales were under $400,000.
  • 59.5% of Lake Norman home sales in August were under $500,000.
  • Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total is 310.  After an impressive August it looks as though our sales will drop below last year’s sales as we head into early fall. This number puts our total current purchase contracts 10.4% lower than last year’s but 7.6% higher than early September 2016.  Keep in mind that last Fall Lake Norman’s sales were record breaking every month so we are up against some huge numbers through the rest of the year!

A closer look at the chart:

  • The number of Active Listings as of today in Lake Norman is down a whopping 16% compared to last year’s at this time.  Although late to the party, this year we joined most of the nation who have been experiencing extremely low numbers of housing inventory for several years. Today we have only 776 single family homes for sale in all of Lake Norman. Yikes! Our absorption rate/months of supply of active listings is a record low of 3.34! This means that Lake Norman as a whole is very much in a seller’s market.  Keep in mind, however, within specific price ranges there are dramatic swings from a buyer’s market to a balanced to a seller’s market.  The average sales price was up 4% and the days on market was up 4%.
  • Under Contract Show (conditional) sales are down 12% from this time last year’s.  The average price of our new contracts is down 7% and the days on market is down 8%. These numbers hint at a rather significant slowdown after 4 exceptional months. I am sure our extremely low inventory is impacting our sales.  UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent solid future closed sales in October/November.
  • Pending/Under Contract No Show sales are down 7% compared to last year’s.  The average price of our pending sales is down 7% and these listings/sellers successfully negotiated a purchase contract 18% faster than last year’s. These numbers also indicate a slowdown in volume of sales but that homes that do sell are selling very fast. Pending sales are contracts that are past their inspection/due diligence periods and are just waiting to close. They are usually the best indication of closed sales this month or early September.
  • Lake Norman’s closed August home sales in our MLS as of today and as stated above, were 10% higher than last August’s and the highest number of closed sales in the month of August since 2005. (See chart below). The average price of our homes sold was up 4% and it took on average 3 more days to sell a home in August 2018 vs 2017.  A very impressive month indeed!

The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:

  • September 8, 2018: 310
  • August 8, 2018: 347
  • July 8, 2018: 345
  • June 8, 2018: 406
  • May 8, 2018: 389
  • April 8, 2018: 334
  • March 8, 2018: 280
  • February 8, 2018: 244
  • January 8, 2018: 206
  • December 8, 2017: 264
  • November 6, 2017: 282
  • October 6, 2017: 301
  • September 6, 2017: 346
  • August 6, 2017: 364
  • July 6 2017: 350
  • June 6, 2017: 370
  • May 6, 2017: 391
  • April 6, 2017: 351
  • March 6, 2017: 295
  • February 6, 2017: 227
  • January 6, 2017: 183
  • December 6, 2016: 237
  • November 6, 2016: 275
  • October 6, 2016: 274
  • September 6, 2016: 288

Here is a breakdown by price-range of our August 2018 closed sales in all of Lake Norman

  • $1,000 – $99,999: 2
  • $100,000 – $199,999: 16++
  • $200,000 – $299,999: 39+
  • $300,000 – $399,999: 40-

        (These price ranges represented 41.8% of our August home sales)

  • $400,000 – $499,999:  41+
  • $500,000 – $599,999: 20

       (These price ranges represented 26.3% of our August sales)

  • $600,000 – $699,999: 18-
  • $700,000 – $799,999: 19++
  • $800,000 – $899,999: 6-
  • 900,000 – $999,999: 6-

       (These price ranges represented 21.1% of our August sales,  23.6% of our July sales, 19.1% of our June sales compared to 19.9% of our May sales, 21.1% of our April sales, 12.7% of our March sales, 14.3% of February sales, 20.4% of our January sales, 14,5% of December’s sales, November’s 22.1%, October’s 13.2%, September’s 23.7% and August’s 24.4%)

  • $1,000,000 – $1,499,999: 19+++
  • $1,500,000 – $1,999,999: 4
  • $2 million+ : 2

       (#Solds $1 million+ = 10.8% of our August sales,  6.2% of our July sales, 8.1% of our June sales, 9% of our May sales, 11.2% of our April sales 7.4% of our March sales, 8.9% of February sales, 7.1% of January’s sales, 6% of December’s sales, 7.86% in November, 7.8 % in October, 9.3% in September, 6.3% of August’s sales,10.6% of July 2017’s sales)

In my opinion, this price range breakdown is one of the most important resources in my market reports because it goes deeper to define our specific strengths and weaknesses each month. In August our standout price ranges were spread out from our lowest $100,000’s, $200,000 to the middle range $400,000’s to an outstanding performance of the $700,000’s and the entry level luxury homes $1,000,000 – $1,499,999.  The most significant drop in sales were the $300,000’s, $600,000, $800,000’s and $900,000’s. As I have said so many times, with our Lake Norman real estate market you really need to know specifics about your price niche because there is such disparity within price range sales trends.

Higher-end home sales in Lake Norman

Properties in the $1 million – $1.5 million had a standout month after dipping last month. However, the sales above this remained stable so overall luxury homes only represented 6% of our entire month’s sales which is comparable to last month’s but well below all but two previous months in the past year. (If you look at my list of luxury home sales for prior months back to last July you can see how our 6% compares to each month).

Lake Norman’s Waterfront Homes

As I wrote above, waterfront homes moved back into a seller’s market in August with the months of supply dropping to 4.9 compared to 6.4 last month and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)

  • Waterfront sales in August represented 25% of Lake Norman’s total sales while comprising 36.6% of our active listings and 31% of our under contract listings.
  • The average price-per-square-foot of our waterfront homes dropped to $248.18 from $262.05 last month.   
  • It took on average 120 days for a waterfront home to sell and they sold for 95% of their listing price.
  • The average price-per-square-foot for our waterfront homes has still not returned to 2007’s peak of $283.16.  So while we have experienced improved activity, our prices are still under their pre-recession highs.
  • There are definitely HOT waterfront properties.  I sold one in May for over asking that had 5 offers in the first week.
  • Vacation rental properties are in great demand which has led to more buyers purchasing waterfront homes for this purpose.

Annual Sales by Month

Lake Norman real estate sales by month and year August 2018

* Please note that all of my numbers are for single family homes in what used to be referred to as “Area 13 – Lake Norman. They come from the Carolina Multiple Listing Service and will not include sales that took place outside of our MLS.** I adjust past months when I do the monthly update as a few more sales are usually input late by agents. ***Our MLS just merged with two other’s so all of the total sales numbers have changed slightly.  I did update the entire 2017 year so that this year’s numbers will be comparing apples to apples. However, I am not going to go back to prior years and adjust.

What a fascinating look above at our highs and lows, especially now that we are 8 months in to 2018.  Our combined total of 1397 is now 2.9% HIGHER than the first 8 months of 2017 and is significantly higher than all other prior years since 2005. As you can see, we are up against some strong 2017 numbers for the rest of the year and our lower numbers of pending contracts today indicate a slow down is coming at least for the next few months. How impressive, however, that despite having 146 fewer active listings in Lake Norman we were able to beat last August’s sales numbers!

Summary and My Insight

Good signs/news for 2018:

  • People are still moving to Lake Norman from all over the country to escape high taxes and cost of living, extreme weather, and myriad other reasons in order to enjoy our beautiful area, mild 4 seasons and quality of life.
  • With 8 months in the books we are now 2.9% ahead of 2017’s exceptional numbers after a bit of a struggle at the start of this year.
  • The number of distressed homes for sale remain so low that they are truly irrelevant and did not play any perceptible role in our Lake Norman housing market.
  • Sellers are in the driver’s seat in many negotiations and are seeing increased equity and even profits. I can’t emphasize enough the importance of upgrading and staging to sell more quickly and in most cases for more money. Design trends have changed since the early 2000’s.  More buyers want white kitchens with big islands that open to their great rooms, hardwood floors (darker stains), remodeled bathrooms with spa showers and grey paint colors. The days of tan walls and dark wood cabinets are somewhat behind us.
  • Multiple offers are possible in nearly all price ranges and even in our waterfront properties if a property is particularly special.
  • New listings in the lower price ranges that are in great condition and in desirable locations are selling with multiple offers within days of hitting the MLS.
  • Move-in condition, updated listings in the trade-up price ranges and homes on exceptional waterfront lots are selling quickly.
  • New construction is definitely back in a consistent way. Custom and smaller groups of spec homes are popping up all over Lake Norman. Builders are telling me that they could built twice as many as they are if it weren’t for the shortage of qualified labor. Note that lumber prices are sky high which is causing construction costs to go up as well.
  • Fannie Mae & Freddie Mac has increased their Conventional Loan Limit to $453,100 from the current $424,100!

Challenges/Weaknesses for 2018:

  • Record-breaking low inventory of active listings! Inventory levels are now down to just 3.34 months of supply which is the lowest in our history. Many parts of our country have been experiencing extremely low inventories for years so Lake Norman is late to the party.  We tend to have less volatile ups and down than states like California so are more of the tortoise than the hare in the big picture of our real estate market compared to the US.
  • Interest rates are creeping up. As of today they are about 4.54% for a 30-year conforming loan. There are concerns about the future pace of these increases and potential inflation based on announcements by the Federal Reserve.
  • Our overall luxury home sales once again slowed after several great months.  However, the $1 million – $1.5 million posted some very strong numbers. Overall this niche is still erratic.
  • Existing home sales are being challenged by new construction.  In head to head competitions new construction usually wins which hurts resale homes in the same or similar communities except in lower price ranges where there simply isn’t enough inventory.  Much of our housing inventory is becoming more and more dated so it will be incumbent upon sellers to do more significant updating and staging to compete with new homes.  Of course, the alternative is to drop their sales price but most buyers are not willing to buy a home here that needs a lot of work.
  • Finding the perfect home can be challenging. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling very quickly. Watching the “hot sheet” is now a necessary part of the buying process for some price ranges and locations.  Don’t procrastinate when considering a really good new listing because they are selling quickly!
  • No matter how hard I try to provide you with the most accurate and insightful data, it is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and/or picked over inventory or you might not.   See my price range analysis for the 2nd quarter of 2018.   
  • Many economists feel that the US housing market will continue to experience a slowdown primarily due to low inventory, rising prices, increased mortgage rates, and challenges with new construction due to increased costs of lumber and shortage of qualified labor. As I wrote above, Lake Norman was a few years behind but is now experiencing extremely low inventories of homes for sale so it is hard to know if we might take longer to slow down.
  • The big picture: “Even as the housing market is chugging forward, hamstrung by low inventory…NAR thinks 2018 will be challenging. The group revised its 2018 forecast to show that sales will be flat compared to 2017.”

Final thoughts: 

As I wrote the past four months:

My family moved to Lake Norman from California in 2005 seeking a better quality of life and a lower cost of living.  I have watched our area grow immensely over the past 13 years. There is no doubt that Lake Norman is still a very appealing destination for folks from all over the country. We now can compete with many trendy cities throughout the country with our amazing number of new restaurants, breweries and entertainment.  But, with this growth has come increased traffic which is now just a fact of life on I-77. With the passing of time, our pre-recession “new” homes are now a bit dated and will be needing new HVAC sysems, water heaters and roofs. With a complete halt to new construction during the recession years we are now lacking the number and type of homes that appeal to many of today’s buyers.  For this reason new construction and remodeled homes are selling more quickly than ever.  It is more of a challenge for our “dated” homes and subdivisions where open floor plans are rare and kitchens and bathrooms are in less appealing woods and materials.  The result has been the need for sellers to do updating before listing and buyers, especially waterfront, need to be more willing to do remodeling after they purchase IF they found a home on a great waterfront lot or in a great location. Today, the bottom line comes down to price, location, condition, updates and proximity to desired amenities.

Buyers today need to know their price range’s.  Are they in a buyer’s or seller’s market? If you are in a seller’s market, be prepared to act fast when a new listing that has been updated comes on the market. Or, if you want a more affordable option in any price range, be prepared to be more flexible.  This means a willingness to do your own updating if you can’t afford an updated home, and, if possible, be more flexible about locations based upon our limited inventory.  At the same time, if you really love the home, be aggressive  with your offer! Come in high and with very clean terms. My Mantra as always: Don’t focus just on the price but also on the future marketability of the property. A bargain that has incurable issues that will make it difficult to sell in the future really isn’t a bargain at all. Be smart!  

Sellers, while our lack of inventory and increased sales favor you, you still have work to do!  Watch a lot of HGTV and, if possible, be prepared to do painting, new flooring, painting kitchen cabinets white when feasible and staging to attract buyers. Your efforts will pay off with quicker selling times and higher sales prices.  I listed and sold another home with multiple offers which can be completely attributed to the renovations and staging.  How do I know this?  The seller had it listed last year in it’s dated condition with no staging and it sat on the market.  We sold it after updating and staging for about $20,000 above where they were before! Also, remember that buyers can be reluctant to buy a home knowing they will need to replace a roof, the AC and heating etc. in the first few years they are living there so, if possible, put on that new roof, replace the HVAC units while you are updating.  ALWAYS offer home warranty plans to buyers!

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